White House fights back on Cash for Clunkers

NEW YORK (CNNMoney.com) -- The Obama administration on Thursday lashed out at a prominent critic of its Cash for Clunkers program, arguing that the popular trade-in initiative helped give the auto industry purchase Inflatable

Products and the economy a much needed boost in the past few months.

In a blog post on whitehouse.gov, the administration argued that a report on Clunkers by automotive Web site Edmunds.com "doesn't withstand even basic scrutiny" and is based on "implausible assumptions."

On Wednesday, Edmunds.com released a study that argued Cash for Clunkers did not have a great impact on the auto industry. The report said that 690,000 new vehicles were sold under the program last summer, but that only 125,000 of them would not have been sold without the Clunkers rebates.

As a result, the report said, the administration's economic claims for the program "have been rendered quite weak."

The Clunkers program gave car buyers rebates of up to $4,500 if they traded in less fuel-efficient vehicles for new vehicles that met certain fuel economy requirements. A total of $3 billion was allotted for those rebates.

The Edmunds report also said that taxpayers shelled out an average of $24,000 per car sold as a result of the program.
Edmunds.com says Cash for Clunkers is a clunker

But the White House fired back, saying Thursday's Commerce Department report that showed auto sales contributed 1.7 percentage points to the economy's 3.5% growth rate in the third quarter is proof that Cash for Clunkers had a meaningful impact on both auto sales and the broad economy.

"Edmunds.com has released a faulty analysis," the blog post said. "This is the latest of several critical analyses wholesale Inflatable Bounce of the Cash for Clunkers program from Edmunds.com, which appear designed to grab headlines and get coverage on cable TV."

The administration argued that Edmunds' conclusions were incorrect because the study assumes that the market for cars that didn't qualify for Clunkers was unaffected by the program.

"In other words, all the other cars were being sold on Mars," said the administration.